Baltic Dry Index. 522 -08 Brent Crude 62.09
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"Sooner or later both the Greek population and international creditors will tire of fighting a losing battle, leading to a break-up of the currency union as Greece pulls out, probably followed by other countries"
Douglas McWilliams, chief executive of the Centre of Economics and Business Research.
In our new, ever more bizarre world of casino
capitalism, in the Great Nixonian Error of fiat money, all news is good news,
since our central banksters will always and everywhere, cover any losing bets
by the one percent. Yesterday’s fiasco in Europe was simply yet more good news.
Both sides in the debacle lost no time in sending out spin meisters. If Greece
is planning on using the nuke option, the early hours of this coming Saturday
are best for Grexit. If Frau Merkel is determined to force Grexit on an
uncooperative Greece, the German beheading is more likely on Saturday February
28th. Dow 35,000!
Below, Bloomie on yesterdays “good” news.
Greek Talks With Euro-Area Finance Ministers Break Up
5:26 PM WET February 16, 2015
(Bloomberg) -- European Commission President Jean-Claude Juncker’s 11th-hour
effort to strike a deal with Greece on Monday was parried by euro-area finance
ministers who sought to extend an austerity program in exchange for financial
support. Talks in Brussels ended abruptly and Greek Finance Minister Yanis Varoufakis claimed a bait-and-switch, saying Juncker’s commission offered a path forward that finance ministers then refused to put on the table. Instead, Dutch Finance Minister Jeroen Dijsselbloem offered a different statement tying Greece to its current agreement. Varoufakis rejected that proposal out of hand, and the euro weakened on the impasse.
Time is running out: The current aid agreement expires at the end of February. Failure to reach an accord could see Greece stumble out of the euro, and while Europe’s defenses are stronger than when the country flirted with exit from the single currency three years ago, a departure could ultimately trigger a flight from risk, bank runs and a downturn in European demand.
According to seven European officials with direct knowledge of the talks, the meeting quickly unraveled, sending the euro lower. The 19-nation euro lost 0.3 percent to $1.1355 on Monday, while Greece’s ASE Index fell 3.8 percent.
Dijsselbloem, who leads the finance ministers’ group, eventually halted the proceedings, saying ministers could reconvene on Friday if there’s a breakthrough.
“The next step has to come from the Greek authorities,” Dijsselbloem told reporters. “They have to make up their minds whether they will ask for an extension.”
Varoufakis said Greece had no choice but to refuse the statement on offer. “In the history of the European Union nothing good has ever come out of ultimatum,” he told reporters after the meeting.
Greece is willing to extend the current aid program as long it’s done on the right terms, Varoufakis said. Prime Minister Alexis Tsipras’s government will now return to the bargaining table and “we are ready and willing to do whatever it takes to reach an honorable agreement over the next two days,” he said.
Monday’s impasse comes a day after Juncker took a personal stake in the Greek negotiations. Tsipras requested a call with Juncker that took place as the commission chief made a “last-ditch effort” to find common ground, an EU official said Sunday.
Without a deal, Greece could run out of money by the end of March, forcing Tsipras to consider abandoning his promises to the electorate or even leaving the single currency.
Greek bond yields are being whiplashed as investors try to gauge progress. Yields on Greek three-year notes rose 174 basis points, or 1.74 percentage points, to 17.58 percent, after tumbling 220 basis points on Friday. Greece’s bonds had rallied last week as officials signaled a willingness to compromise.
More
Greek crisis talks collapse in acrimony as Syriza defies EMU
'The only way to solve Greece is to treat us like equals; not a debt colony,' says Greek finance minister
Greece is on a collision course
with the eurozone’s creditor powers after emergency talks ended in acrimony on
Monday night, triggering the most serious political crisis since the launch of
the euro.
The Leftist Syriza government
reacted with fury to eurozone demands that it must stick to the country’s
discredited austerity plan, describing the draft text as “absurd and
unacceptable”.
Yanis Varoufakis, the Greek
finance minister, said Eurogroup finance ministers had ignored a deal already
agreed with the European Commission for a four-month delay and a “new contract
for growth”, returning instead to old demands. "The only way to solve
Greece is to treat us like equals; not a debt colony,” he said, predicting that
EU authorities would soon have to withdraw their latest “ultimatum”.
The talks were halted after four
hours of stormy exchanges, risking a traumatic showdown that could precipitate
the biggest default in world history and force Greece out of the euro by the
end of the month.
Mr Varoukais said Syriza had won
a landslide vowing to overthrow the EU-IMF troika memorandum and could not
betray Greek democracy. "It would be an act of subterfuge to promise our
partners that we will complete a programme we were elected to challenge."
----The Eurogroup text said “the Greek authorities have indicated that they intend to successfully conclude the programme taking into account the new government’s plans”. A leaked copy showed these words crossed out by Mr Varoufakis, who peppered the paper with angry annotations.
Part of the dispute appears
semantic but has political implications. The Greeks want a new arrangement, but
that would require a vote in the German, Dutch, Finnish and Slovak parliaments,
where patience with Athens is exhausted. The Eurogroup is insisting on an
“extension” of the programme, which does not require parliamentary assent.
Yet the clash runs deeper. The
text said the Greeks must toe the line on “tax policy, privatisation, labour
market reforms, financial sector and pensions”. It said Greece must continue
with “fiscal surpluses” imposed by the troika, meaning that Athens would have
to raise the primary budget surplus from 1.5pc of GDP in 2014, to 3pc this year
and 4.5pc next year.
----Greece has few open allies in the Eurogroup. Germany fears that austerity discipline will collapse across southern Europe if Syriza wins concessions, while Spain, Portugal and Italy fear populist bushfires in their own countries. Yet the assumption that Syriza will back down under pressure is highly risky.
Mr Varoufakis wrote in The New
York Times that he is not playing academic “game theory” and is not bluffing.
“The lines that we have presented as red will not be crossed,” he said.
Syriza is riding a wave of
sympathy at home that extends far beyond its electoral base. The latest polls
show that 81pc back the government’s refusal to buckle to Brussels, and that
the party would win an outright majority in parliament if there were fresh
elections.
Berkeley professor Barry
Eichengreen, a leading currency expert, said Europe would pay a “very high
price” if Greece is ejected from the euro. “I wouldn’t invest a single penny in
Europe. The risks are too big,” he said.
“It would engulf other countries.
Once Portuguese families or Spanish businessmen see that euros have turned back
into drachma, they are going to pull their money out of their accounts. That
could turn into a bank run. Investors would then start to speculate on who the
next exit candidate would be.
It would undermine the whole euro project.
Sticking to the rules is not a worthwhile concept when the rules are leading
straight into catastrophe,” he told Die Welt.
More
Elsewhere in the continent made for tanks, no one
complied with the truce in the Ukraine. The consequences of America’s botched
coup in Kiev go on. Uncle Scam’s Quisling president in Kiev, is now traitorously
making war on his own people for a foreign power. He will be lucky not to
eventually suffer Norway’s Quisling’s fate.
Ukraine crisis: Army and rebels stall heavy arms pullout
17 February 2015 Last updated at 05:22
Ukraine's government and
separatist rebels have failed to begin withdrawing heavy weapons from the front
line, despite a Monday deadline.
The two sides were given until
not more than two days after the latest truce came into effect to start the
pullout.
The government said it would not
pull back until fighting ended in the beleaguered town of Debaltseve.
Separatists say the agreement
does not apply there because the town is surrounded.
They have offered Ukrainian
troops encircled there a safe corridor to leave. France, Germany and the US
expressed concern at the continued fighting.
The Ukrainian military command
said pro-Russian rebels had attacked 112 times since early Sunday, mostly
around Debaltseve.
A Ukrainian officer said there
was also fighting near Mariupol, a port city.
More
“Those who don't know history are destined to repeat it.”
Edmund Burke
At the Comex silver depositories Friday final figures were: Registered 67.85
Moz, Eligible 108.49 Moz, Total 176.34 Moz.
The markets were closed for Presidents Day
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Greek Euro exit is 'inevitable', former UK Chancellor Ken Clarke warns
Britain must insulate itself from the effects of a 'Grexit', the Tory MP says, ahead of a tense meeting of eurozone finance ministers in Brussels
A Greek exit from the eurozone
appears inevitable and Britain must insulate itself from the effects, former
Chancellor Ken Clarke has warned.
The Conservative MP branded the
new government in Athens “latter day Trotskyites”, and said there was no way
their demands could be met.
“
I can’t see how you can sensibly
avoid the Greeks defaulting and the Greeks having to leave the eurozone.
“It’s not anything to do with just the Germans, I can’t see why any other states should take a huge multi-billion pound hit again for the Greeks so they can hire more civil servants, raise their minimum wage (and) scrap all their labour market laws.”
More
Roger Bootle: A 'Grexit' may not be too harmful
Greece is going to default. Its debt position is unsustainable. The key questions are: when will it default; and what will the default be called?
Even though canny market
operators still suppose that a messy deal between Greece and the eurozone will
be cobbled together, wise heads tell us to be prepared for a Greek exit from
the euro, commonly referred to as “Grexit”.
But preparation first requires
understanding. The framework for thinking about Grexit was set out in Capital
Economics’ winning entry for the Wolfson Economics Prize in 2012.
On the key issues, nothing has
happened since then to weaken that analysis, even though some of the details of
the situation have changed a bit.
So, here are the seven key issues
at play.
1. People say that Grexit would
be accompanied by a default.
The Greek government would try to
re-denominate its debt into the new national currency – let’s call it the
drachma – which would constitute an implicit default. Over and above this,
there would probably be an explicit default as well.
But so what? Greece is going to
default anyway. Its debt position is unsustainable.
The key questions are: when will
it default; and what will the default be called? This being Europe, the land of
fantasies, the second question is, of course, particularly important.
Previous answers have been
“restructuring” and “rescheduling”.
More recently, the term “debt
forgiveness” has been in vogue. But this is going to sound much too generous to
the man on the Berlin omnibus.
My own favoured solution is to
claim that there hasn’t been a default but to swap Greece’s debt into a
perpetual (that is, never to be redeemed) non-interest bearing bond. (Think
about it. Indeed, why don’t you try to convert your mortgage into one of these
– and see how your mortgage lender reacts.)
2. How would Greece manage
without printed (and minted) versions of the new drachma?
Most transactions in a modern
economy are electronic anyway – including payments by credit and debit cards.
For the small proportion of transactions (by value) carried out with notes and
coins, the simplest thing would be to use the existing euro versions.
Over-printing these with some
Greek national symbol to indicate that they were now drachma would be both
unnecessary and ineffectual. Over-printing would not alter their value and
acceptability elsewhere in the eurozone.
If you had a €100 note, why would
you surrender this for over-printing, and if you received an over-printed one
why would you accept this as now being worth 100 drachma – or whatever – rather
than €100?
3. Wouldn’t a new Greek currency
fall dramatically on the exchanges?
That should be the hope, not the
fear. The idea is to lower the cost of Greek output and hence exports in terms
of other currencies (including the euro) at a stroke.
More
"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."
Henry Hazlitt
The monthly Coppock Indicators finished January
DJIA: +124 Down. NASDAQ: +220 Down. SP500: +178 Down.
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